Medtronic buying Covidien

Big news in the medical device world:

U.S. medical device maker Medtronic said on Sunday it had agreed to buy Covidien for $42.9 billion in cash and stock and move its executive base to Ireland in the latest transaction aiming for lower corporate tax rates abroad.

As big as they are, these two companies don't have that much overlap in the products they sell.  Medtronic focuses on cardiovascular, while Covidien does not have many products in that space.  So from that perspective the deal makes sense.  Although one of the main benefits seems to be a tax advantage for Medtronic, when you're paying $42 billion for a company for a tax advantage, I think it is a clear sign that the US corporate income tax is too high.

On the other hand, the stock market is at an all time high, so you're buying a company at its most expensive. If you're buying it with your shares which are also at all time high, then maybe it all works out, but you have to pay the buyout premium of 40% or whatever it turns out to be.

Entertainingly enough a few years ago Covidien bought ev3 (among others) and was still working on re-branding their products world wide, assuming they re-brand to Medtronic, at this rate, they'll never catch up.

Regardless, we'll see how this deal works out in the long run.

Onshoring manufacturing

Medical devices are largely designed in the United States and while the US has a decent size medical device manufacturing industry, it has been significantly moved offshore the last twenty or so years. The offshoring I've been part of hasn't worked out nearly as well as the executives planning the move has hoped with the offshore sites running into labor or quality problems that took years to work through. Two articles have recently caught my attention on companies starting to inshore production.

The NY Times published an article which covers the negatives of out sourcing and companies who have shifted manufacturing to the United States:

Time was foremost among them. The Indian mill needed too much time — three to five months — to perfect its designs, send samples, schedule production, ship the fabric to the United States and get it through customs. Mr. Winthrop was hesitant to predict demand that far in advance.

There were also communication issues. Mr. Winthrop would send the Indian factory so-called tech packs that detailed exactly what kind of fabric he wanted and what variations he would allow. But even with photos and drawings, the roll-to-roll variance was big. And he couldn’t afford to fly to India regularly, or hire someone to monitor production there.

He also found that suppliers deferred to his wishes, rather than being frank about some of his choices, which weren’t, he conceded, always good ones.

These negatives match my observations and aren't easily solvable. Additionally, Atomic Delights details how Apple makes the Mac Pro in the United States:

What makes Apple fascinating is not that they are using some wiz-bang alien technologies to make things - even here in Portland, Oregon, all the technologies Apple shows in this video are in-practice across numerous local factories. What makes Apple unique is that they perform their manufacturing with remarkable precision and on a scale that is simply astonishing, using techniques typically reserved for the aerospace or medical device industries.

Usually a company undergoes an expensive clean up the line activity (clarifying documentation, improving equipment, etc.) before offshoring, then still runs into the problems. I think if companies spent more of the money they spend on offshoring on improving production processes then they could be just as profitable in the US.

Device companies deal with ACA

QMED details how one medical device company is dealing with the 2.3% tax on medical devices imposed as part of Obamacare:

To cover reduced margins, merit Medical no longer provides 401(k) matching for its employees. In addition, the company stopped donating to charities it previously supported, such as Junior Jazz and The Leonardo. That said, the company has not had to lay off any of its employees yet. In total, the company employs 1,700 people. “You take that kind of money out of a company and something has to give and it's basically research and development or marketing, and those are jobs,” notes Fred Lampropoulos, CEO of Merit Medical.

Excellence in Equipment Documentation

Penelope Trunk has an interesting post on Jake Breeden's Tipping Sacred Cows which lists sacred cows in corporate life that we should reconsider:

Balance: Disguising indecision as a bland compromise that attempts to achieve many things but ends up accomplishing nothing

Collaboration: Creating a culture of learned helplessness with little individual empowerment and accountability

Excellence: Spending too much energy producing perfect work instead of developing the quick-and-dirty solution needed now

Fairness: Keeping score and evening the score to make sure no one gets more than their “fair share”

Passion: Racing down a path seeking success only to find burn-out and misbehavior instead

I think Excellence is a controversial sacred cow, so I wanted to use an example from my medical device factory.  We have a comprehensive equipment program, whenever you have a piece of equipment it will take you at a minimum two to three weeks to get it qualified.  The two to three weeks process time applies to off the shelf equipment we probably already have 15 of that we're already using. 

21CFR820.72 and 21CFR820.70(g) cover equipment requirements, 820.72 is mainly calibration, 820.70(g) is as follows:

(g)Equipment. Each manufacturer shall ensure that all equipment used in the manufacturing process meets specified requirements and is appropriately designed, constructed, placed, and installed to facilitate maintenance, adjustment, cleaning, and use.

(1)Maintenance schedule. Each manufacturer shall establish and maintain schedules for the adjustment, cleaning, and other maintenance of equipment to ensure that manufacturing specifications are met. Maintenance activities, including the date and individual(s) performing the maintenance activities, shall be documented.

(2)Inspection. Each manufacturer shall conduct periodic inspections in accordance with established procedures to ensure adherence to applicable equipment maintenance schedules. The inspections, including the date and individual(s) conducting the inspections, shall be documented.

(3)Adjustment. Each manufacturer shall ensure that any inherent limitations or allowable tolerances are visibly posted on or near equipment requiring periodic adjustments or are readily available to personnel performing these adjustments.

These requirements can be summarized as the equipment must be sustainable and qualified.  These requirements can generally be satisfied by information in the equipment manual and the process testing that you have to do anyway. 

However, as mentioned above, at my work we go far beyond the requirements, we must release a custom drawing of the equipment, custom maintenance procedure and form, - this information is in the manual, but we like to copy it into our own forms.  All of these are held to the internal standards, even though they are absolutely worthless, if I want to do any maintenance work on the equipment, I'm going to reference the manual, not the drawing an engineer threw together to meet a requirement.

A software evaluation must be completed even if the equipment obviously has no software, along with forms for installation qualification (IQ) assessments: line voltage, environment, EMF, safety, calibration, etc.  While it is necessary to perform and document an IQ, the company culture has developed tribal knowledge requirements to do so, if you don't justify the need to not validate the non-existent software properly, well you'll just have to do it again, of course the templates contain no guidance on these.  You can't justify out of measuring line voltage even though your soldering iron clearly works fine.  Operation qualifications are sometimes performed when only installation qualification is needed because justifying out of them has become difficult.

At all steps you need appropriate sign offs, which generally consist of four or five people.  While this is someone's version of excellence, it really accomplishes nothing that isn't included in the manual for an off the shelf piece of equipment. 

A review of warning letters from the FDA reveals the most common issue with equipment is not performing required preventive maintenance or calibration.  In fact, as far as I can tell, no one has ever been cited for not finding a calibrated volt meter and checking the voltage before plugging a piece of equipment in.

All the time making excellent equipment documentation is time spent not working on further understanding of the production process.  If you're spending your energy on getting approvals for a drawing you made of box oven #12, then you are not improving something meaningful.  

Medical Device Tax

The medical device tax is a 2.3% tax on medical devices, everything from bed pans to surgical tools.  It was signed into law as part of the Affordable Care Act, also known as Obamacare.  As I understand, the logic behind it was if more people are getting more care, more medical devices are being sold and therefore medical devices can pay some of the way.  This logic doesn't follow for drugs, whose companies have better lobbyists.

What is a company to do?  Assuming you are a public company and a certain margin is expected you can either pass the costs on to your customers or cut back on generally marketing and/or R&D (you could also cut quality, but I wouldn't recommend that).  I suspect if you're in the low margin bed pan business, you pass the costs on, you don't have a bunch of bed pan R&D to cut.  If you are the stent or some other product with higher margin, I suspect you also pass the costs on to your customers.  You have some brand leverage and a product you can differentiate yourself from the competitors so switching is more difficult.

Alternatively in either case you could just suck it up, maybe decrease your dividend and hope your investors are kind, but I'm telling you right now, CEOs are looking for ways to pass costs on to their customers.  That is their job, to look out for the company.  Passing the costs on to the customers defeats the whole purpose of the tax, lets look at the cutting R&D option as well.

The Incidental Economist has a post title the job killing medical device tax parts 1 and part 2.  He quotes a recent paper by Bryan Schmutz and Rex Santerre on the device tax and R&D, in part:

simulations show that the recently enacted excise tax on medical devices, taken alone, will reduce R&D spending by approximately $4 billion and thereby lead to a minimum loss of $20 billion worth of human life years over the first 10 years of its enactment.

So decreased R&D spending on medical devices reduces health care quality, which again defeats the purpose of the tax.

The incidental economist has seven points about the tax, none of which I entirely disagree with, however a one I think deserves comment.

One can be confident that the medical device industry will benefit tremendously from the large increase in the number of insured individuals to begin in 2014.

On this point, it depends on the device, some devices are presumably being used to treat the entire population that needs treated now.  These devices would typically be used in emergency cases.  For example, if you're having a heart attack, if you show up at the hospital, you'll get the treatment you need.  If there are people out there not getting treated, it is not because of insurance, more likely its due to access to medical care (i.e. they live in a place that can't deliver the needed treatment), or patient education (i.e. they think they'll be fine if they just wait it out).  More insured people won't increase device use here.  The devices most likely to be used more are the low margin ones, which are generally manufactured overseas.

In fact, a company could end up in a situation where the low margin products increase, the higher margin products don't increase, and you have a tax to deal with where you must cut R&D on high margin products, and/or pass the tax on to customers, neither of which was the purpose of the tax.

One of the comments brings up a good point about start ups:

This is a 2.3 percent tax on gross sales, right? If gross sales are $10, and profits are 10% or $1, then a 2.3 percent tax on gross sales wipes out roughly a quarter of the firm’s profits. For early stage companies with sales but with current operating losses, or negligible profits this could easily mean either paying taxes on losses or imposing losses on break-even revenues.

There are a decent number of companies with a few products and don't currently make a profit as they expand, they don't lose much either, but they are constantly on the edge.  It would be somewhat interesting to see how a company like Thoratec would have grown with this tax in place.  This makes it seem to me that a start up economics may change and a start up may try to sell itself or its products to a larger company sooner, as the transition from small to medium sized company is now harder.  This would result in the 10 or so large diversified companies that dominate the market continuing to do so.

All of this remains to be seen, and I'm trying to keep an open mind about it, but it doesn't make much sense to me right now.

How to get startup ideas

Great essay by Paul Graham at Y Combinator, the right way:

The way to get startup ideas is not to try to think of startup ideas. It's to look for problems, preferably problems you have yourself.

The wrong way:

Imagine one of the characters on a TV show was starting a startup. The writers would have to invent something for it to do. But coming up with good startup ideas is hard. It's not something you can do for the asking. So (unless they got amazingly lucky) the writers would come up with an idea that sounded plausible, but was actually bad. 

For example, a social network for pet owners. It doesn't sound obviously mistaken. Millions of people have pets. Often they care a lot about their pets and spend a lot of money on them. Surely many of these people would like a site where they could talk to other pet owners. Not all of them perhaps, but if just 2 or 3 percent were regular visitors, you could have millions of users. You could serve them targeted offers, and maybe charge for premium features. 

The danger of an idea like this is that when you run it by your friends with pets, they don't say "I would never use this." They say "Yeah, maybe I could see using something like that."

I think just about every product I've worked on at a non-startup has been the "wrong" way, where marketing / engineers come up with an idea and sell it to physicians, launch it, and hope it does well.  In some cases, we may have worked the other way, but this was generally due to bad device design from the start and they wanted something fixed.  The team rarely challenges where the project came from, because they generally come from executive management and it is a difficult position.  Large companies aren't usually looking for breakthrough products (every one of them will say otherwise), they are looking for a solid return on investment.

How to efficiently follow your competition

Working in medical device R&D its important to keep an eye on your competitors.  Marketing is too busy working on presentation font size to be reliable on this.  The easiest way to do so is using Google Reader, you'll need a Google account to make it work.  From there just add Medgadget, your competitor's press release site (if any), and MassDevice to Google Reader.  If  your competitor launches a new device or has an idea it may be covered in Medgadget, more general news in MassDevice.  However, if your competitor has a poor marketing department or is small, some news may slip through the cracks.

To take your stalking to the next level, follow the company on LinkedIn, although this hasn't been that useful for me yet.  Then set up a search using your competitor's name in Google Blog Search.  Google blog search will pick up every little tidbit, but blogs are generally spammy, so you'll ignore a lot of things on there.  You can do the same thing with Google News and Google Patents.  From the FDA website, you can also follow recalls, reported complaints, 510k and PMA approvals, however, you'll probably have to do this manually or just read their monthly digests, the website isn't set up well for this.  For example, PMAs are set up one month per page, and every year has its own page, good luck getting that to work, they do have a feed for recalls though.  Short of actually talking to anyone, that is about as thorough as you can get.  You will obviously have a hard time following a start-up this way as there is usually no news.

While you're setting all of this up, you probably want to set it up for your company as well.  You can use other keywords like the type of device you're interested in instead of the competitor's name.  This blog can also be followed on Google Reader.  You don't have to use Google Reader for this, you can actually set up RSS feeds in outlook and it will email you items into a certain folder, but Google Reader you can log on anywhere with a web connection so I like it better.

St. Jude's impressive product development time

St. Jude has recently announced approval for its optical coherence tomography / fractional flow reserve (OCT / FFR) system called ILUMIEN (fyi: they have a cheese video of water with words flashing across on their site, the Light Years Ahead tagline is good though).  The press release for FDA approval was on October 26, 2011.  The press release for EU approval was on July 14, 2011.  I'm sure the two extra months the FDA took was value added questions about colorant or something (assuming they did both submissions at the same time).

Anyway, I thought it would be fun to look at St. Jude's performance on this new medical device product development timeline from start to approval.  In this case we have a unique opportunity because we know when St. Jude bought Radi (the FFR part), and when they bought LightLab (the OCT part).  These dates are all approximate, since St. Jude could have waited a few days or weeks to make announcements, but ballpark is good enough for this blog.  St. Jude bought Radi Medical AB for $250 million on December 21, 2008.  St. Jude bought LightLab for $90 million on July 7, 2010.  The EU review was probably 45 business days or about two months, giving a 10 month product development time line.

I will assume they couldn't really get started until July 2010, if so, I think it is impressive to combine these two systems, even if they added no features beside switching, and get approvals in basically a year.  Sure they could have done some work on the cart, and presumably they have some hardware picked out before 2010, but most of the hardware and software will have to wait until you know the specifics- which a company won't give out until it is bought.

Maybe you can make your software modular and they can add in applications quickly as it grows, but it initially came from Radi, and smallish companies don't usually think that far ahead.  Maybe they started on this in 2008.  But more realistically, the software group was given two programs that had no intention of interacting and they managed to make it work in 6 months and 2 months of test.  Oh yeah, the two teams are probably at different sites, so you have that difficulty to constantly work through as well.

There is another wrench to throw into the works, IEC 60601-1:2005 (3rd edition), which is scheduled for EU implementation on June 1, 2012, you'd be crazy not to build a new system to 60601 3rd edition and have to redo it in a year or so for the EU.  So I'm guessing that there was also an update of at least LightLab's system and probably Radi's system to 60601-1 3rd edition included in this device as well.  Now maybe these companies had already made the transition, but small companies I know are behind on this requirement.  Yes, some of the changes are minor, but they still involve significant amounts of work.  Additionally, the 60601 testing itself takes a reasonable amount of time that would have to be worked in.

Now this is assuming the quality of the product is adequate, they could have rushed out junk (although I have no reason to think this based on the water video), I am impressed that they were able to complete this new product and get it approved in such a short period of time, congratulations to them.  Could your company pull this off?

Working for the man

I can't get enough of Seth Godin, I particularly liked this line from a recent post:

Work for a coal mine and make minimum wage. Discover a coal mine and never need to work again.

I think it probably hits home for every engineer in medical devices.  A typical core team seems to be six or less engineers with two to three of them doing the heavy lifting for design and process design.

Google health shuts down and the FDA approves a device in 30 days

Google Health is apparently shutting down, too soon, we're just getting ramped up in fact.  Although they didn't seem to embrace the key to making their system widespread and more popular, user input, not just physician input, the two would be easy to separate.  The aps are already out there, they just need to be linked to health records, blood pressure, workout data, smoking, drinking, drugs, diet, etc.  The whole state of California would love to upload their workout history to their health record, with the user invested in their health record, the health record becomes more useful and valuable.  Someone will put this together and it will be awesome.

Anyway, enough on that, I did say that I had something good to say about the FDA a post or so ago, from Mass Device: "The system was submitted for Food & Drug Administration 510(k) review in mid-May and is available for sale in the U.S. just one month later."  They managed a 30 day 510(k) review, which is probably nothing impressive for a blood pressure device, but it is on the iPhone which is probably somewhat more difficult to show that it wouldn't be corrupted, do you apply for the Ap from Apple or for approval from the FDA first?  So, good work.

New product turn over

MedCity News has an article on J&J exiting the coronary drug eluding stent business:  End of J&J stent business carries lessons for medical device innovators.  It is very surprising to me that they are just leaving the market, surely with $400 million revenue this year they could make something happen.  I know they were getting their clock cleaned, but what kind of signal does this send to their R&D organization as a whole?  We're not afraid to throw in the towel?  Obviously J&J has a lot of smart people and I've never run a Fortune 500 company.

The take away message from the article is you need to keep innovating...  I have no idea why you wouldn't, you need to turn over your devices regularly to stay competitive, plus each time you do it you can raise prices and increase margin.  Plus you're paying those engineers anyway (hopefully)- don't let them get distracted on non value added side projects.  How often you turn over your devices with new models depends on the devices, guide wires and catheters, every 1-2 years you should have a new model or at least a respectable line extension.  Other devices can take longer depending on their complexity and regulatory approval time, obviously for drug eluding stents you need a more significant investment. 

That being said, don't do it just for the sake of having something new, if the device isn't actually improved a reasonable amount they customer will notice.  I was part of one launch with really good immediate sales, then a huge fall off because the customer realized this new product didn't meet any need the old one didn't, in fact it was worse (from their point of view, from the company point of view it was cheaper.)  After the initial buys, the customers didn't reorder, they saw right through it despite the best efforts of marketing.  If you're investing in a medical device company this is one thing you want to look for, are they launching new products at a reasonable rate, or are they just sitting back and letting things happen?

Anyway, congratulations to Abbot, Boston Scientific, and Medtronic enjoy your extra sales. 

How to help

From a recent FDA press release:

The FDA is helping advance the development of an artificial pancreas system...

I think they should be more clear.  What they are really doing is releasing a new guidance document which "will help provide clarity for manufacturers, investigators and reviewers in the development of the artificial pancreas system. It proposes safety and effectiveness goals that the FDA may require researchers and industry to meet when developing a type of artificial pancreas system".  Some other things are listed (like a workshop...), but they aren't actually advancing the science.

It is quite a stretch to say this actually helps to advance the development of anything, it just sets expectations, which is great, but lets call it like it is.  To advance the development, you need to be working on the device itself, not what you may require as the regulatory pathway. This is probably oversimplifying, but if we were to say all cars must get 50 mpg meeting a defined criteria, I don't anyone would claim that we were helping to advance the development of high mileage cars.  (I have some FDA praise slated for a future post, so don't feel bad for them)

Not that this is limited to government.  This is a fairly common response when a project team runs into an issue.  The project manager calls a meeting to help resolve the issue and the theory is we all pitch in and solve it.  In reality there is one guy doing 90% of the work on this problem and it takes too long to really bring another person up to speed on all the required details and anyway they have their own stuff to do.  The meeting (or workshop...) just serves to piss the person doing all the work off by either suggesting common sense things he's already done or doing, giving him unnecessary work, or suggesting unnecessary work that he has to fend off.  If he is your subject matter expert, trust him, who else is going to solve the problem, the Sr. Director?

If you're the project manager- one on one the guy doing the work, figure out what he wants.  Also know his weaknesses and compensate.  If he's great at solving the problem, but can't write a report or presentation that passes management muster, then get your ace report writer primed and ready to take over. If he doesn't have the attention span to stand around in the lab for 14 hours straight and supervise testing, make sure the lab guys know what is expected and fill in to keep them running.

I've seen projects delayed for months because everyone was too busy solving the problem with meetings (Why don't we look at this... How about a build that does this.... Did you write that PO yet...) to get hands on time to actually solve the problem.  If you're not working on the device, on the manufacturing floor, in the test lab, you're not advancing the development of the device.

Update 1: If you'd like to read more on the FDA and company responses on the artificial pancreas, try here or here.

Catheter recall - tip detachment due to embrittled material

Boston Scientific is getting a bit of attention for an IVUS catheter Class I recall, to be honest a smaller company probably wouldn't get the same attention.  What I thought was interesting was that they published a rate for the catheter tip detachment, from Cardiovascular Business:

The corrective action, announced May 27, is being taken due to eight confirmed cases of catheter tip detachments caused by the embrittlement of catheter material. The Natick, Mass.-based company confirmed a rate of 0.027 percent of catheter tip detachments in the U.S. and Puerto Rico from April 1, 2010, to May 10, 2011.

I don't think I've seen a rate published before and a quick search didn't turn up anything.  Presumably this is their complaint rate, of 0.027% or about 1 in 3700, so their recall of 30,000 devices prevented 8 tip detachments.  No more details are available, so we don't know if it is a design issue or a manufacturing issue, although an "embrittlement of catheter material" sounds like a design issue- but it is not impossible to imagine something done incorrectly in manufacturing that could cause this.  That being said, storage conditions or sterilization effects (if it is not EtO) would be where I would start.

From a risk point of view, if there is one thing you don't want to happen is for parts of a catheter to fall off inside of someone, the severity is obviously high.  Tip detachment is generally detectable at least when you remove the catheter from the body, if not sooner, depending if the part detaching is radiopaque or if the catheter stops functioning when the tip detaches.  In this case the bar has been set, a rate of 0.027% is too high, which I would agree with, especially for a large company and this type of diagnostic device with suitable alternate diagnostic methods available.  Boston Scientific is doing the right thing with the recall and hopefully they are able to address the issue and move on.

SonoChief predicts the costs of the recall:

Boston Scientific’s voluntary recall of the iCross Coronary Imaging Catheters will be disruptive to their ultrasound division. With an average street price of  [private]$800 dollars a recall of nearly 30,0000 catheters equates to a loss of 2.4 million inventory.
...
Boston Scientific customers are being told all iCross Coronary Imaging Catheters are being replaced with Atlantis SR Pro Coronary Imaging Catheters, which will operate with Boston Scientific’s IVUS imaging consoles and are immediately available.  The Company does not expect this recall to have a material financial impact.

Which is actually $24 million (incorrectly multiplied above), if you use street value, but presumably Boston has a margin of 60% or more, and no one buys list price, which would put the cost closer to $4 million.  Although the recall is being expanded beyond the original 30,000 catheters.  The cost to their reputation as competitors gain is obviously significantly higher.

I'm not sure what the take away from this is other than do a thorough job on your verification testing, Boston Scientific surely documented and tested for the tip detachment risks and thought they were acceptable, but the rate came out higher than predicted.  I would like to know the material and conditions that lead to the issue, I have a few guesses, but its doubtful we'll ever see that level of detail.

Lean Product Development

I've been working on lean product development lately, but haven't made much progress.  For the most part we're able to turn over prototypes quickly enough, the addition of a simulated sterilization cycle would help, but we don't have the equipment for decently controlled humidity.  The two areas we seam to have the most problem is fixing very minor product problems and document control. 

The minor problems are usually software bugs or nagging fit or packaging problems that we can make work, but we wouldn't release with.  No one is really excited about tackling these because they have the tendency to turn into a lot of work.  Someone just needs to grind them out before we get to verification.

The document control delays are the delays that really get under my skin.  I've worked with both paper and electronic systems now and I by far prefer electronic- especially if the team is split geographically.  By electronic I don't mean the team signs a paper and scans it in and someone compiles it, I mean an approved online signature method.  The problem almost always turns into we all agree on everything when we're talking, but putting it down on paper makes people weird, especially if you have a bad system where it is all or nothing and no one read anything ahead of time so you end up with several restarts.  Now if you have a change you want to make that is 100% fine-by-me just do it in a timely manner and we're square.  Try to avoid being one of the following types:

1. Double-dipper - bring up everything you want changed the FIRST time through, don't keep coming up with new issues.  Second rounds of comments should be very rare.
2. Nit-picker - does adding that re-formatting really add value?
3. Delayer - doesn't read anything until its past due then has to find some issues to make the delay seem appropriate
4. 2 center - can't let anything go without adding more work no matter what, 90% of the time adds no value.  You want a hold order on this engineering product even though it is labeled "Not for Human Use" and the part number isn't active in the distribution or customer service systems so there is no possible way it could ship on an order?

Not that I'm perfect, but I try to come back to value added when making comments.  Most of the time it is quicker and better for relationships to just suck it up and put up with whatever to get to the next step, but that doesn't really create a culture of improvement.  Every cycle through the documentation system probably costs $500 when you have a bunch of Californians involved.  For now I've decided to gently nudge people in what I consider the right direction, hoping to change the culture over the long run.  If we can just focus on what is important maybe we don't have to work so many late nights, etc.  I don't really know of another way to approach it.

BTW, there are a ton of great lean blogs out there, here are a few:

Evolving Excellence
The Lean Thinker
gemba panta rei
Gemba Tales

Latex Free Labeling

For a new device we spent a bit of time working on "Latex Free" labeling.  From the FDA point of view (801.437), the key point is natural rubber.  The term "natural rubber" includes natural rubber latex, dry natural rubber, and synthetic latex or synthetic rubber that contains natural rubber in its formulation.  So while your label coatings may contain latex to give them that glossy look, its most likely synthetic latex (although not always), and you're off the hook.

ASTM D6499 (LEAP assay) can be used to determine if your device tests positive for natural latex and is reasonably cheap insurance that your product is safe.

Recently BS EN980 added a Latex symbol for devices that contain latex.  However, there isn't a corresponding recognized symbol for latex free, so the words Latex Free seem like the way to go.  Many companies, including GE and 3M, use the Latex symbol with an X through it.

While it is easy enough to lay off the latex gloves in your assembly area, what are your suppliers or their suppliers doing?  Although it seems far fetched, a polymer resin handled with someone wearing latex gloves could make its way into your molded part.  I can assure you, tracking down this information is a pleasant way to spend a week.  Updating your Certificate of Conformance requirements from the product development seems like the easiest way to go.

Update 6/26/2013:  The FDA has issue a draft guidance, see this issue revisited here.

Annual review of received parts' dimensions

Many companies perform an annual review of every dimension or 100% inspection on all received parts. While this may serve as a halfway decent preventive action, I'm not convinced it is worth it. If you have automated inspection methods, maybe then it is not too much effort, but we're still using hand tools or manual adjustments for the majority of our parts.

You could argue that you have a critical device, we have to check for dimension drift. Well why aren't you checking for that anyway? And if it is so critical shouldn't you have insured that the supplier's process was capable before you even signed up with them? If it is truly critical and you're not checking it but once a year, good luck with that.

Additionally, if you do find something out of specification, nine times out of ten it is going to be on a non-critical dimension, or else you would have caught it in receiving inspection or manufacturing anyway. Once you find the out of spec item, you have to go back to your inventory, check it, then justify why it is either okay and change the specification, or send it back, and jump through hoops to justify why it was okay to use on the ones sold, but not okay to use going forward, or whatever other contortions QA wants.

In my experience these generally boil down to unclear or unnecessary specifications or measurement issues, where to start measuring a curve, a hole over specified, etc. Another argument for doing it right the first time and checking your supplier's process.

However, this if often a difficult battle, as new parts are generally part of R&D efforts and the team from R&D is behind schedule and they always try to make up schedule time by trying to get either quality or manufacturing to compromise on one issue or another (I *may* have pointed this out at a meeting once). If this happens and you don't have time to ensure supplier process capability, it is not the worse thing in the world, you can always blame the vendor and shop around for a new one that has no familiarity with the part and uses the same process that can't meet the specification. Sometimes the best you can do is make the risks clear.

Things I never thought I'd have to worry about

A volcano in Iceland slowing shipments to and from Europe, since we ship everything by plane now. Inventory costs money but so do lost sales.

The longshoreman strike on the west coast about five years ago also slowed me down, back when we shipped by boat. Then it was product development and not production so it wasn't as urgent. We just moved to another piece of the project.

Everyone loves the idea of second sources, but small companies don't have time. Each new supplier of a custom part generally requires dozens of hours of training. "If you don't take that burr off, its not going to meet the specification. Please mask those holes next time like it clearly states on the drawing, etc." I can only improve the products or the business at once, take your pick. Improving products improves the business, although that is no good if you're out of business.

So you pick critical parts and go from there. A machine shop, you can get up to speed fairly quickly if you spend the time. Extruded tubing, not so fast, there is a 12 week material lead time, better plan for that. And even better is that some regulators want to be notified of a supplier change or even an alternate. We also implemented a finance check based on the current economy, but that has been a waste of time, our suppliers should do a finance check on us!

Pot and Medical Device Manufacturing

California is set to vote on marijuana legalization later this year. I'm pretty much a live and let live guy, but how is this going to effect California's fairly large drug and medical device industry? I'm sure people will debate this, but lets cut right to how companies will see it:

In California you will have a much higher chance of someone stoned building your product and on average stoned people make worse decisions than non stoned people.

This probably doesn't matter if you're renting movies at BlockBuster, but small mistakes in medical devices can cost lives and / or millions of dollars. Right now most companies mitigate the risk of drug use by screening on hire and periodic screening. How would you mitigate in the future, or is my fear overblown? I don't think legalizing pot will help manufacturing in California, obviously that is not the only consideration, but an important one I think.

Finding Owners

More and more I'm learning one of the keys to making good devices that meet quality and regulatory standards is finding people who will take ownership. Lately I've been working in the packaging area a lot and almost every time I'm in there I find discarded labels without lines drawn through them. Of course these are always discarded by the other shift. Everyone already knows the labels need lined out when questioned, so the basic training is there.

If you're an owner, you walk into your area and you own it top to bottom. You don't not fix things because you weren't around. You correct the issue and take it up with the supervisor on shift change. These are the types of people you want, and why many large medical device companies pay way over what they could for manufacturing labor. Pointing out the same non conformance over and over to the same people is ridiculous.

I've been involved with contract manufacturing in China and they were excellent at following instructions. They picked up GDP about 3 times faster than anyone else and have maintained it. This is not to say everything is perfect, but the basics were taken care of. Some of the more complicated situations that came up with the contract manufacturer were really botched up before we were notified, but at least I know the easy stuff is covered.

I'm not sure that me telling the 19 year old putting labels on boxes that this is the era of global competition and she has to work smarter and harder than they are really sinks in. Hopefully, we have a chance to develop the skills necessary because you only get so many chances.

Separation of powers

As a "project engineer" I've come to appreciate why larger companies put R&D in a different building- so they can get something done. Anytime part of your duties include supporting manufacturing, you have a very hard time setting aside enough time to accomplish significant design goals. Instead the manufacturing support gets done and the development that can be done reasonably quickly gets done in spare time, research a new fitting-sure. Seriously, there is nothing I can do about part Z getting here 3 weeks late, yet I am dragged into those discussions all the time.

So if you're running a company or managing engineers, keep your functions separate, or else realize that someone working 25% on manufacturing support is in reality going to spend 75% of his time on it. Don't even drag them into it, you might help in the short run, but in the long run you're worse off if the entire company is running around putting out the fire of the moment.